Seeking Alpha

Nassarius Capital

View as an RSS Feed
View Nassarius Capital's Comments BY TICKER:
Latest  |  Highest rated
  • LivePerson: The Bearish Side Of The Argument [View article]
    user 120-

    Thank you for the valuable insight from the competitor and business user point of view. If I may ask a few questions:

    Have you had an opportunity to work with any of LivePerson's new solutions? If so, please elaborate on your experience.

    Does the company whom you work for have access to the LiveEngage platform? If so, can you speak of the new analytic solutions' purchasing cycle from a business user view?

    From a business user view, what do you see as areas of improvement for LivePerson? Any future threats?

    I would greatly appreciate any feedback and thank you again for commenting.
    Apr 3, 2014. 10:07 AM | Likes Like |Link to Comment
  • LivePerson: The Bearish Side Of The Argument [View article]
    ---the ~95% retention: Management cites retention by giving attrition rates every quarterly call. For example, from the Q3 call, “Customer attrition from enterprise and mid-market accounts averaged 0.9% during the third quarter;” and from Q4 call, “Customer attrition for enterprise and mid-market accounts averaged 1.7%.” We pay more attention to the larger accounts as the SMB space has to account for higher failure rates among SMBs, and generally higher operational volatility.

    ---the review site: the simple fact that you made the decision to include this in your argument lowers the credibility of your argument

    ---“showing no signs of operating leverage in 14 years:” Before LPSN really kicked it in to investment mode in 2012, the company showed signs of growing income. 2010 saw adj. Ebitda margins of 24% with EPS of $.30. 2011 saw higher adj. Ebitda margins 25.5% and EPS grew 20% to $.36

    ---the upgraded LiveEngage 2.0: the 2% of revenue potential you speak of is regarding chat only, as LPSN only chats with 2% of a company’s website visitors; this has nothing to do with LiveEngage 2.0 (which contains the data analytic solutions: LP Marketer, LP Insights, and ADE) …the LiveEngage platforms 1.0 through 1.3 have basically been beta tested on LPSN’s SMB customers to work out the kinks before giving platform access to the larger strategic customers via v.2.0. The opportunity comes from penetrating the mid-market/large existing customers with v2.0. and giving access to the data analytic solutions from a platform view, which is designed to drive purchasing activity. As a competitive advantage, think about LPSN’s highly scalable cloud infrastructure running 22 million chats per month. How many competitors do you think has that capability coupled with the reliability of LPSN? Name them and provide gross margins.

    ---on valuation: Name the faster growing players in the chat space that are selling data analytics. Keep in mind, LPSN has not begun to fully sell data analytics, which opens the door to faster top-line growth. The other reasons for a higher multiple were listed: large addressable market opportunity and potential for significant margin expansion when transitioning out of investment phase. Now for another differentiator: LPSN is the pioneer of chat and, thus, has a historical database of chat transcripts far larger than any competitor. From this database, the new analytics solution LP Insights analyzes this unstructured data to provide real-time insights that will allow the chat rep to drive sales higher. In other words, LPSN’s larger historical database should provide more accurate insights and should drive a higher ROI than competitors. Now for clarifying the profitability of analytics solutions vs. existing chat product… this should not need any clarification.

    ---As for your last paragraph: It is a rambling mess. The bottomline is this: at sometime within 18-24 months from now, we will see how well LPSN plays out. We have a bullish view at this time and you have a bearish view, so wish the best of luck.
    Apr 2, 2014. 11:40 AM | 1 Like Like |Link to Comment
  • LivePerson: The Bearish Side Of The Argument [View article]
    We appreciate an opposing view; in response:

    author states: “no moat with very low switching costs” and offers a review site with lower cost products.

    ---If there are low switching costs and a plethora of lower cost chat products, then how do you explain LPSN’s ~95% retention rate? ---Also, if you’re attempting to define a moat, then can you explain LPSN’s brand equity and how that relates?

    author offers review site:

    ---Please explain how this site is not biased when it sells the reviewed products? Why would this site, or any similar site, not highly rate the highest commissioned products? Plus, try clicking on the buy link for LivePerson… it doesn’t work, in other words the site isn’t authorized to sell LivePerson, thus, the site provides it a low rating.

    author states: “the only differentiator is price”

    ---Then once again, if LPSN’s product is more expensive, how can you explain LPSN’s ~95% retention rate. (Of which, the only large meaningful customer lost over the past 3yrs was due to a move in-house, not to competition)
    author doesn’t understand Oracle as competition: “However, I would argue that the industry got even more competitive. Oracle will not throw the acquired operations to the bin - it will bundle live chat service together with its other software solutions and offer it to existing customers, which cover most of Fortune 500 companies and the likes abroad. Thus after this move I hardly see any possibilities for companies such as LivePerson to be able to sustain market share among larger enterprises. Why would anyone buy a separate service from LivePerson, if Oracle offers a fully integrated service that works seamlessly with other Oracle products”

    ---Oracle acquired Art Tech and RightNow over three years ago and LPSN management has consistently stated that each company has been seen at fewer and fewer negotiating tables… As for buying bundled ORCL products, LPSN offers a fully integrated service (the LiveEngage platform) and claims 1/3rd of the fortune 100 as customers

    author argues: “Cost base is increasing at the same rate as revenues”

    ---As we explained numerous times, LPSN is in investment mode: adding sales and marketing staff, building out the LiveEngage platform, acquiring two companies, building out indirect sales channels and expanding overseas. All of which leads to a more prosperous future.

    author states: “over-hyped upgrade” (author actually partly answers his 1st argument with the cross-selling sentence)

    ---Try rereading the 1st catalyst: LiveEngage penetration of installed base is underestimated. The difference of the new version is that v.2.0 is rolling out to the large enterprise customers. The second point is simply irrelevant.

    author states: “research reports were not found independently”

    ---We provided links to the unbiased Forrester Research on e-commerce growth. Research or not, we think everyone can agree that e-commerce is likely to experience continued growth. Here is a supporting bullish research link from IDC that LPSN does not mention:

    author states: “overly-optimistic valuation”

    ---LPSN is moving into data analytics with LP Marketer, LP Insights and ADE. Similar SaaS categories include data analytics/business intelligence and marketing. Some companies from those categories include comScore, Splunk, Adobe, BazaarVoice, Marketo, and responsys (acquired by ORCL). Thus, we believe as data analytics becomes a larger portion of revenue then multiple expansion is merited based on similar company multiples. Also, considered in the argument for a higher multiple is the large addressable market opportunity (expected shift from phone to chat) for LPSN’s leading position. Another reason for a higher multiple, as LPSN exits the investment phase margin expansion should be significant.

    ---In conclusion, it is rather obvious the author has performed only a few hours of research on LPSN. While we appreciate an opposing view, we remain bullish from current price levels and believe LPSN offers a long-term opportunity.
    Apr 1, 2014. 01:40 PM | 2 Likes Like |Link to Comment
  • Zygo: Overlooked, Cash-Heavy, And Ready To Rebound [View article]
    Cho, how deep can you dig that hole your in? The attractiveness of a high cash balance with zero debt is that Zygo is ripe for a buyback program, hence, unlocking shareholder value. Also, large cash balances are also attractive for highly cyclical businesses because it acts as a safety net during troughs. If you say Zygo is in a commodity business that is lacking in future prospects then why would management take on debt, especially with 30% of MV in cash?

    We don't have time to address your other replies, but let us spell it out for you. Your logic is flawed because you are using backwards looking data to make forward based assumptions. If you cannot see the issue here, then you should stop replying.

    Good luck Cho
    Mar 11, 2014. 10:52 AM | 1 Like Like |Link to Comment
  • Zygo: Overlooked, Cash-Heavy, And Ready To Rebound [View article]
    A perfect example of someone not taking you serious... I completely wrote off your very first sentence:

    'Balance sheet metrics are pretty useless, as in having no debt, is irrelevant.'

    I wonder how far you will get with that frame of thought, bud
    Mar 11, 2014. 12:18 AM | 2 Likes Like |Link to Comment
  • Zygo: Overlooked, Cash-Heavy, And Ready To Rebound [View article]
    Wow, you have a long ways to go.... how can anyone take you serious?

    Reread these two sentences you wrote:

    'Based on historical run-rates for revenues, the outward looking expectations on your company are way too high.'

    'Also, your outward looking assumptions on revenue is way too optimistic considering the historical under performance of sales.'

    Now try to concentrate really hard on why your logic is flawed.

    Good luck Cho
    Mar 10, 2014. 11:39 PM | 1 Like Like |Link to Comment
  • Zygo: Overlooked, Cash-Heavy, And Ready To Rebound [View article]
    Wow, do your homework before commenting. Or maybe you simply do not understand. The company is actually conservative here by reviewing previous qualitative judgments.

    This was deemed immaterial to Zygo's operations and future, as stated in the most recent call:

    "As discussed in the press release, we have made significant progress on resolution of issues in our deferred tax accounts and improving the controls of our accounting for income taxes. We have installed robust controls and are using third-party experts to ensure that all historical accounts are properly stated.
    During the review of the accounts we have uncovered adjustments reported over the past several quarters, none of which have an effect on operations, reported operating results, cash position or cash flow. The aggregate of those adjustments has been determined to be immaterial to the financial statements of the 2012 and 2013 fiscal periods and more appropriately reflected in the financial statements of the periods to which they relate."

    From the company website:

    "On February 11, 2014, Zygo Corporation (the “Company”) filed a notification of late filing with the SEC pursuant to Rule 12b-25 under the Securities Exchange Act of 1934, as amended. As disclosed in the filed Form 12b-25 and the Company’s prior SEC filings, the Company had been undergoing a review of its deferred tax asset and liability accounts, in connection with the Company’s efforts to demonstrate remediation of the material weakness in accounting for income taxes reported in the Company’s Form 10-K for the year ended June 30, 2013. However, the review of these deferred tax assets and liability accounts took longer than expected, and the Company failed to file its Quarterly Report on or before February 18, 2014 (the permitted filing date, including the extension provided pursuant to Rule 12b-25).

    The Company filed its Form 10-Q with the SEC on February 25, 2014. The Company has notified NASDAQ that the Quarterly Report has been filed; and that the Company is in full compliance with the NASDAQ listing requirements.

    The Company’s Form 10-Q is available on Securities and Exchange Commission web site at"
    Mar 9, 2014. 03:41 PM | 2 Likes Like |Link to Comment
  • Zygo: Overlooked, Cash-Heavy, And Ready To Rebound [View article]

    Thank you for the comments.

    Pertaining to the Barron's article in early 2010, when Mr. Kaufman was building a position, Zygo's stock price was performing quite well, recovering from $3 at the '09 bottom to reach previous cycle highs of $20 by mid-'12. So, we ask what did need to happen at that time? It was clear the market's sentiment towards Zygo's fundamentals was positive. Not until mid-13 when Zygo's stock price fell to ~$14 did Mr. Kaufman seek a Director seat and eventually the Chair. Also, by relieving the former CEO you speak of, we believe that is evidence of 'something happening.'
    Mar 8, 2014. 04:35 PM | Likes Like |Link to Comment
  • Emcore: Activism, Sum-Of-Parts Analysis Suggest Significant Upside [View article]

    Thank for posting the new info.
    Feb 26, 2014. 07:21 PM | Likes Like |Link to Comment
  • Emcore: Activism, Sum-Of-Parts Analysis Suggest Significant Upside [View article]
    Thank you for the kind words. No knowledge on Zion's Direct bond services.
    Feb 26, 2014. 07:18 PM | Likes Like |Link to Comment
  • Emcore: Activism, Sum-Of-Parts Analysis Suggest Significant Upside [View article]
    Thank you for the comments and good questions.

    So, first off, to be more specific on first-mover advantage; Emcore introduced micro-ITLA in March 2010 and launched in March 2012. Oclaro followed soon after (through the Opnext acquisition) and a year later NeoPhotonics entered the micro-ITLA picture. With likely integration issues for Oclaro, we may assume Emcore is a year ahead on design wins, which is a fairly big jump for this space given the length of product cycle.

    It is true that EMKR has struggled historically in Fiber, but that can also be said for nearly every other player in the field. However, EMKR’s ITLA and micro-ITLA have not suffered relative to peers. This business line is currently shipping record volume quarter over quarter and the expected ramp of micro-ITLA by 2H14 should steepen the trajectory. Our thesis is fairly conservative for this product line, growth of 30% for FY15, considering Infonetics expects 100G products to have a CAGR >75% through 2017. For Fiber as a whole, we made a point the TXFP’s hit the bottom line at -$16 million and suggested exiting. Otherwise, Fiber would have been positive, driven by ITLA growth. In other words, investors need to get past looking at Fiber as a whole and drill down to relatively enormous opportunity of micro-ITLA in 100G.

    As for larger, stronger peers (FNSR, JDSU) to steal any micro-ITLA success; neither company even offers ITLAs or micro-ITLAs. It is highly more likely that FNSR or JDSU looks to acquire this piece, given the length of time from R&D to design win. We made a notion EMKR might look to exit the uglier Broadband (cable tv) piece, but no talk is confirmed.

    It could make sense to chop off the entire Fiber segment, and FNSR may be the answer (with significant product commonality). Operations would likely become the most focused in this case. Anyhow, with Becker Drapkin on the Board, any change to EMKR is likely for the better.
    Feb 24, 2014. 12:13 PM | Likes Like |Link to Comment
  • RPC, Inc: Well-Positioned For Increased Completion Activity [View article]

    Thank for the comments and kind words. The flattish (maintenance) capex is likely to continue until overcapacity fades. We do not expect a 2012-type growth capex anytime soon.
    Feb 24, 2014. 10:29 AM | Likes Like |Link to Comment
  • NeoPhotonics: Blossoming In The Need For Speed [View article]
    Interesting... What is relevant is no mention of a buyout target in the report. As for a random comment, NPTN could be an attractive buyout just as any other company with similar characteristics. NPTN represents a good value with a decent balance sheet; well-positioned within a rapidly growing market that is still in early days; with an above-average management. team.

    No intention to gain credibility here, more so, just agreeing with common sense.
    Feb 16, 2014. 03:13 PM | Likes Like |Link to Comment
  • NeoPhotonics: Blossoming In The Need For Speed [View article]
    Agree on all accounts. As 2014 numbers trickle in there is potential for an adjustment to sentiment and likely increases in 2015 EPS estimates and price targets.
    Feb 15, 2014. 01:25 PM | Likes Like |Link to Comment
  • Sigma Designs: Appealing At 2x Cash With Catalysts Impending [View article]
    Thank you for commenting and good questions. We tried to make it obvious that to right-size the business the 35mm could easily come from cutting headcount to more appropriate levels.

    As we stated: The majority of increase in R&D arose from the revenue grabs of Coppergate and Trident that added 141 and 320 employees, respectively, a ~100% increase in headcount. The larger base of engineers and a new addressable market caused Sigma to beef up the SG&A headcount as well, which is now an area where we see opportunity. By aligning expenses with revenue in a similar fashion to Broadcom through focusing on further reductions in headcount, we calculate that SIGM should be able to cut an additional $35 million in op. expenses, based on our FY2014 (ends this Jan.) revenue estimate of $201.7 million.

    We are not fond of any management commentary, as you correctly stated they have been incorrect countless times. However, it is true the DTV and Home Control markets could be considered growing. The space is highly volatile and we tried to remain conservative with a flattish top-line.

    Jan 28, 2014. 01:28 PM | Likes Like |Link to Comment